A place for a tired old woman to try to figure things out so that the world makes a bit of sense.

Thursday, April 29, 2010

Ending A Deadly Practice

WellPoint, the parent company of Anthem Blue Cross, has announced that the company will end the practice of rescission. In other words, they'll stop cancelling health insurance policies the minute the policy holder actually files a claim for health care.

Stung by criticism and facing tougher federal regulation, two of the nation's largest health insurers say they will stop the practice of dropping sick policyholders.

The moves Tuesday by WellPoint Inc., the parent of Anthem Blue Cross of California, and Blue Shield of California follow action by Congress and the Obama administration to crack down on the practice known as rescission. ...

Insurers have defended rescissions, saying they were trying to stop fraud. But a series of Times articles, legislative hearings, lawsuits and regulatory investigations showed that insurers often rescinded without regard for whether their customers intended to deceive them about preexisting conditions on their applications for coverage.

The practice resulted in some people losing coverage through no fault of their own, often over trivial bits of health history that had nothing to do with the claims that triggered the investigations.

Amid the heightened scrutiny, rescissions have been in decline since 2006. [Emphasis added]

One of the provisions of the recently enacted healthcare reform bill forbids insurers to refuse coverage on the basis of preexisting conditions, which makes the issue moot. However, that provision doesn't kick in for a couple of years, so if Well Point really does cease the practice, that is good news for healthcare customers. Given the company's history in California, that's a big "if."

Last week, Health and Human Services Secretary Kathleen Sebelius lamented a Reuters report that reported that WellPoint targeted breast cancer patients for rescission. WellPoint's Braly shot back in a letter: "WellPoint does not single out women with breast cancer for rescission. Period."

On Tuesday, the company announced it would end the practice. Rescissions by its California unit Anthem Blue Cross peaked at 866 in 2005.

At that time, the California unit did indeed target patients with breast problems and other serious conditions for rescission investigations, according to a 2006 Times article. "There is a list," Anthem Blue Cross employee Sheila Millan said in a deposition. The list included diseases of the jaw, endometriosis, disorders of the female genital tract and, notably, disorders of the breast.

As noted earlier in the article, after extensive media exposure of the practice (particularly by the Los Angeles Times and scrutiny by the appropriate state agencies, the practice did decline dramatically.

The interesting thing is that honoring their contracts didn't hurt the bottom line of the company, as this article points out:

WellPoint Inc. said that earnings jumped 51% during the first three months of the year compared with the same time last year, even as it lost money in California after state regulators forced it to delay premium increases of as much as 39% for thousands of customers who buy their own insurance.

Would someone tell me again just why our health care needs should be directed by for-profit corporations?